A federal judge today (Nov. 18) sentenced Theranos founder and CEO Elizabeth Holmes to 11 years and three months in prison, citing the need for investors in Silicon Valley startups to be able to take “risks free from fraud.”
U.S. District Judge Edward Davila ordered Holmes to surrender to federal custody on April 27, 2023, apparently taking into account the fact that Holmes is pregnant with her second child.
Holmes was convicted of four counts of wire fraud based on false and misleading statements she made to investors in Theranos, the now-defunct blood testimony company in the Stanford Research Park.
The sentencing today capped a four-hour hearing during which prosecutors had pushed for a 15-year sentence. Holmes’ lawyers requested a sentence of 18 months of home confinement.
The packed courtroom heard an emotional appeal from Alex Shultz, son of the late George Shultz, a former Theranos board member, and father of Tyler Shultz, a Theranos employee who had tried to alert his grandfather to the concealment going on at the company and the defects in its blood-testing technology.
Holmes, Alex Shultz said, had “desecrated his family.”
Holmes spoke last, telling the judge that she loved Theranos and that the company was her “life’s work.”
“I am so, so sorry,” Holmes said. “In looking back there are so many things I would do differently if I had the chance.”
She told the judge that going forward she just wants to contribute by helping “one person at a time.”
Explaining his decision, Davila harkened back to the agricultural days of Silicon Valley, then talked about the change brought about when the area became known for its innovation.
“The world relies on us,” Davila said. “This is a fraud case where an exciting venture went forward … only to be dashed by misrepresentations, hubris and just plain lies.”
Davila calculated the prison term using federal sentencing guidelines, which take into account the number of victims of fraud and their overall losses. Holmes’ fraud, Davila said, affected at least 10 investors whose losses totaled more than $120 million.
He denied a defense request for a variance from the guidelines based on Holmes’ acceptance of responsibility, saying that Holmes had not met the requirements for such a deduction.
Once her prison term is served, Holmes will spend three years under supervised release, Davila ordered.
He told the lawyers to agree on a future hearing date at which Holmes’ restitution obligation will be determined.
Prosecutors have asked for a restitution order of over $800 million. The defense has asked that Holmes not be required to pay any restitution, arguing that she “essentially has no assets.”
The court’s probation officer agreed with the conclusion that Holmes has no money.
Holmes’ defense team told the judge that they plan to file papers asking that Holmes be allowed to remain free on bail until an appeal of the judgment is decided. — Bay City News
Stanford’s proven VaporWare model being fake it until you make it, I am confident the Honorable Judge Edward Davila could have said the opposite, that this was a fraud case where an exciting venture went forward … and succeeded only by misrepresentations, hubris and just plain lies …until they found a marketable product.
I’m surprised she got any prison time. I would have bet, given how judges treat white collar crime around here, that she would have received a stern lecture and probation. Maybe she’d be sentenced to help a nonprofit build a website or something like that.
Tyler Schultz’s family is out $400,000 defending from the threats and stalking by Holmes and her lawyers. Homes’ father STILL defends her as the brilliant victim while her lawyers and PR firms used the cyclical “Anchor Babies Leniency” ploy hoping her calculated pregnancies would get her off, while ignoring the fact that 58% of women already in jail are mothers. Blaming it on her boyfriend’s abuse is beyond tacky and is just another evasive tactic.
Shame on her defenders. Read “Bad Blood” and remember she drove the chief scientist to suicide, she bragged to a Walgreen’s employee that they “don’t sent pretty people like me to jail.”